2. Monopolistic Competition and Intro-Industry Trade Suppose that the market for motorcycles is characterized by monopolistic competition, and that there are 4 identical countries in the world that produce motorcycles. Take the following assumptions as given: a The initial size of each country's market is 5;: 9,000 (motorcycles sold). . All firms in each country have identical cost structures and symmetric demand curves, so that they set the same price and share the market equally. Hence each firm sells 1,000,000i; where n; represents the number of firms in country II o The fixed costs of production for a firm in the motorcycle industry are F = $100,000 and the variable cost per finished motorcycle (= constant marginal cost) is equal to c: $4,000. 0 Under autarky, the market price in each country is given by: P.- ' c 1400/0; 0. Calculate the equilibrium number of firms (It?) in each country's market wfrhauftrade. Show your work and circle your film\" answen b. Calculate the autarky equilibrium price of a motorcycle. Now suppose that the nine countries form a free trade agreement for motorcycles, so that their markets are completely integrated. Calculate the equilibrium number of firms in the integrated world market (am-id\"). d. Calculate the free trade equilibrium price of a motorcycle. Briefly explain why production is more efficient under free trade (1 sentence). 5" 5